Global digital payment transactions may have grown by 10% for first time: Capgemini

September 24, 2016

With digital payments gaining momentum across the globe, electronic transactions may have witnessed an unprecedented growth of 10 per cent in 2015, according to a latest World Payments Report 2016 (WPR) released by global consultancy firm Capgemini and banking major BNP Paribas. The report projected global digital payments transactions to have reached 426.3 billion in 2015, reflecting over 10 per cent growth from 2014, compared to a previous growth rate of 8.9 per cent.

The growth in digital payments transactions is largely being driven by strong economic growth in key developing countries, improved security measures such as EMV[1], biometrics as well as government initiatives designed to encourage electronic payments in these markets as the cost of cash continues to rise, the report said. The report noted growth in digital payments occurred across all regions, with developing markets experiencing the highest rates — 16.7 percent — and mature markets growing at 6.0 per cent, although mature markets still accounted for 70.9% of total global volumes.

For the first time, China surpassed the U.K. and South Korea in digital transaction volumes, taking fourth position among the top ten markets globally, behind the U.S., the euro zone and Brazil. “FinTechs as well as the creation of Innovation Labs in banking are establishing new precedents for developing superior customer journeys,” said Anirban Bose, Head of Banking and Capital Markets, Capgemini. “The key now is in the mix of the partnerships and collaboration that can be done to drive out the most innovative digital services possible at the right ‘moments of truth’ along the customer journey.”

The report said cards remain the fastest growing digital payments instrument since 2010, while cheque usage continues to decline. Immediate payments have the potential to drive growth in digital transactions as an alternative to cash and cheques, but efforts are needed to educate stakeholders, provide more value-added services and upgrade infrastructure at merchants and corporate companies.

A number of banks already have started to adopt a ‘digital-first’ mindset. According to the WPR, 79 per cent of bank executives now view FinTechs as partners. Banks could have additional opportunities to further drive innovation in transaction banking by opening up their internal systems through open application programming interfaces (APIs) and leveraging the requirements of the Payment Services Directive II.